Qantas-Emirates deal gets ACCC OK

Qantas Airways shares were flat in early trade as the airline welcomed a preliminary decision giving its proposed alliance with Emirates the green light.

In a draft ruling, the Australian Competition and Consumer Commission (ACCC) said it was likely to approve the partnership, albeit with conditions, when a final decision was handed down in March 2013.

At 1051 AEDT, Qantas shares were flat at $1.45, having earlier reached an intraday high of $1.47.

Qantas chief executive Alan Joyce said the airline's customers were strongly supportive of the partnership and the airline had put in a strong case arguing the benefits of the deal to travellers and Australian tourism.

The alliance was regarded as a key plank of Mr Joyce's plan to turn around Qantas' struggling international operations, which reported a $450 million loss in 2011/12.

The two carriers had proposed a 10-year alliance, but ACCC chairman Rod Sims said the regulator was only prepared to approve it for five years.

Mr Sims said the alliance was "likely to result in material, although not substantial, benefits to Australian consumers".

There would also be public detriments, however, Mr Sims said, particularly on flights across the Tasman.

"On the overlapping routes between Australia and New Zealand, the ACCC is concerned that the alliance may have an increased ability and incentive to reduce or limit growth in its capacity in order to raise airfares," Mr Sims said.

"Therefore, the ACCC is proposing a condition to restrict the ability of the alliance in this regard."

Mr Joyce said the airline would focus on responding to the ACCC on the trans-Tasman issue as it sought final approval for the partnership.

Emirates president Tim Clark said the two airline brands were a strong match for each other and the partnership would allow the Dubai-based carrier to add more Australian destinations such as the Gold Coast and Hobart on its network.

"Australia is one of the top three destinations in the Emirates network, popular for our business and leisure travellers alike," Mr Clark said in a statement.

Tourism and Transport Forum chief executive John Lee described the ACCC's draft ruling as a sensible outcome.

"This alliance will help to underpin continuing growth in aviation capacity, which is critical to growing international visitation to Australia," Mr Lee said in a statement.

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